Functional magnetic resonance imaging was used to identify the neural correlates of Chinese character and word reading. The Chinese stimuli were presented visually, one at a time. Subjects covertly generated a word that was semantically related to each stimulus. Three sorts of Chinese items were used: single characters having precise meanings, single characters having vague meanings, and two-character Chinese words. The results indicated that reading Chinese is characterized by extensive activity of the neural systems, with strong left lateralization of frontal (BAs 9 and 47) and temporal (BA 37) cortices and right lateralization of visual systems (BAs 17-19), parietal lobe (BA 3), and cerebellum. The location of peak activation in the left frontal regions coincided nearly completely both for vague- and precise-meaning characters as well as for two-character words, without dissociation in laterality patterns. In addition, left frontal activations were modulated by the ease of semantic retrieval. The present results constitute a challenge to the deeply ingrained belief that activations in reading single characters are right lateralized, whereas activations in reading two-character words are left lateralized.